Crain News Service
DETROIT - New-car dealer Mel Farr Sr. is trying to raise $45 million to expand his used-car superstore business.
Farr, a former running back for the Detroit Lions, owns and operates Mel Farr Superstar Used Cars in Ferndale, Mich., a suburb of Detroit. The store is geared toward customers with credit problems.
Triple M Financing Inc., Farr's used-car financing company, is trying to raise the money in a private placement to pay off debt and develop more superstores. Farr has two stores planned for Detroit but has not selected sites.
The private placement is being conducted by Union Bank of California N.A. of San Francisco. Farr said he might take Triple M public in the next couple of years if things go well with the first private placement, which he hopes will be completed next month.
'We've been financing used cars for 10 or 11 years,' Farr said. 'I see a real opportunity to make money and provide a needed service for the urban market.'
He also is president of Mel Farr Automotive Group in Oak Park, Mich., which operates 12 dealerships around the country. Mel Farr Automotive had revenue of $561 million in 1997 and projected revenue of $600 million in 1998. It ranked 54th on Automotive News' 1997 list of top U.S. dealer groups.
Farr's Triple M Financing has financed about 7,000 loans totaling about $50 million. The financing is aimed at individuals who have bad credit, no credit or low income.
Each Mel Farr used-car superstore would have 250 to 300 vehicles priced at $11,000 or less, Farr said. The dealerships would have a small service area and a showroom on about 2.5 acres of land. Each store would employ 40 to 50 people.
Farr does not believe he will face much competition in Detroit. However, the general manager of Detroit II Auto-mobiles, which has one used-car dealership in Detroit and five in the metro area, says he already is competing with Farr.
'I don't think Mel Farr has hurt us at all,' said Larry Lee, general manager for Detroit II Automobiles in Detroit. 'We have good cars that we sell to good customers that want their credit re-established.'
Detroit II's dealership has 200 vehicles that sell for $2,500 to $14,000, Lee said>